- Ownership of the Cahora Bassa dam on the Zambezi River has finally been transferred from Portuguese control to Mozambican hands at a ceremony witnessed this week by five southern African heads of state and government, but in the absence of the PM from the former colonial power. Cahora Bassa is the region's main power producer.

The ceremony, which on Tuesday took place in the village of Songo, in the central Mozambican province of Tete, was preceded by last-minute negotiations on the terms of the deal which lasted well into the early hours of same day. However, at 0600hrs the Mozambican Minister of Energy, Salvador Namburete, emerged from the Joaquim Chissano Conference Centre in Maputo where the negotiations where taking place to announce that "finally, the deal is done!"

Mozambique needed to disburse the remaining US$ 700 million out of the US$ 950 million agreed between the Mozambican and Portuguese governments. This cleared the way for Mozambique to take control of 85 percent of Hydroelectric of Cahora Bassa (HCB), the company that operates the Cahora Bassa dam on the Zambezi River.

Portugal will now hold 15 percent of the company's shares. Before the signing of the new agreement, Portugal held 82 percent of the dam, while Mozambique held the remainder. Portugal controlled the dam since colonial days.

A sum of US$ 250 million was paid in October 2006 with funds from the state budget, while US$ 700 million was borrowed from the Canadian consortium, Calyon, and the Portuguese bank, BPI. It is expected that the loan will be paid up from the company's earnings.

Speaking in Songo, Mozambican President Armando Guebuza said that the reversal of the HCB marked "a second independence to Mozambique". Mr Guebuza added that "Mozambicans have won an important battle towards their well-being."

Indeed, Cahora Bassa contributes immensely towards the country's GDP. Currently, the HCB rakes in some US$ 150 million per annum through power sales, mainly to South Africa and Zimbabwe. The dam has an installed capacity of 2,075 MW.

President Guebuza said that after all the debts have been repaid Cahora Bassa would bring the country great benefits that would contribute significantly to the balance of payments, for the reduction of the budget deficit and improvement of the country's finances. He also said that the HCB will continue to play a major role for the development of Mozambique and of the Southern African Development Community (SADC) region.

That Cahora Bassa dam is important for the region was highlighted by the presence of presidents Robert Mugabe of Zimbabwe, Bingo Wa Mutarika of Malawi, Festus Mogae of Botswana and Levy Mwanawasa of Zambia. Also present were South African deputy President Phumizile Mlambo-Ngcuka and Swaziland's Prime Minister Absalom Themba Dlamini. Portugal was represented by Finance Minister Manuel Teixeira dos Santos, while the Prime Minister had been expected.

Indeed, there have been warnings of a possible power deficit in the SADC region. Some regional countries have had to start rationing power supplies, and new power projects are needed to offset the demand created by rapid economic and industrial development.

President Guebuza added that the transfer of Cahora Bassa paved the way for Mozambique's industrialisation as power tapped from the dam could reach rural areas, and also supply new industrial projects.

Mozambique has for years been attracting potential investors for a new dam on the Zambezi at Mphanda Nkuwa, some 70 kilometres downstream from the existing Cahora Bassa dam - it is hoped Mphanda Nkuwa could generate 1,500MW.

By Bayano Valy, at Southern African Research and Documentation Centre (SARDC)

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